Opinion
Daytime robbery called DDO
by Sumanasiri Liyanage
Last Friday, the organisers of ‘UNITE’ convened a meeting of all the oppositional parties, trade unions amd civil society organisations at the Public Library in Colombo. UNITE is an umbrella organisation comprising some leading trade union organisations like Ceylon Bank Employees Union, United Federation of Labor, Ceylon Teachers Union, FTZ unions, Postal Union and other several leading trade unions, and the collective of multiple social movements.
At the outset, Jagath Gurusinghe, General Secretary of the UFL explained briefly but eloquently the principal focus of the meeting. He informed the gathering that the meeting was a just one more step in the on-going protest and agitation against Ranil-Rajapaksea government and its proposal for domestic debt restructuring. The steps that have been already taken was lucidly explained. The focus of the meeting is three-fold. 1. A brief critical analysis of the CBSL proposals and their implications to the working people (awareness building); 2. The work done so far to counter and stop the implementation of DDO (auditing the past work); 3. Prepare a joint action plan that includes all the oppositional political parties, groups and social movements (the front formation). As Jagath Gurusinghe of the Telecom Union has informed that the campaign against the government’s DDO proposals by the united action front has been tentatively fixed for August 28.
Revisiting CBSL proposal to the Parliament
Based on many an analysis of DDO, this article is focused on a different dimension, here the methodology that been adopted is a simple calculation based on available and projected data. The release of the annual report of the Employees Provident Fund (EPF) is unusually and invariably delayed so that we have to base ourselves on two to three-year old data. Secondly, our analysis is on the general EPF and not on specific sector or company run superannuation funds. Notwithstanding the fact that the devaluation of the principle fund that may be attributed to price inflation, the negative influence brought down by it is bracketed in the context of this article. Nonetheless, it is important to note that the adverse impact of inflation is substantial and continuous.
The current value of the EPF is Rs. 3,460 billion, making it the most lucrative single capital resource in Sri Lanka. The fund has been growing annually. Its main injections and withdrawals are plotted in Figure 1: Domestic Debt Restructuring ex ante.
The main injections to the pool of resources has been two-fold. The are: 1. Monthly contributions of the members of the fund that comprises private, corporate and the state-owned enterprises; and 2. Annual earnings of the fund that comes from myriad forms of fund’s investment. As the Figure 1 shows that while the first amounted in 2022 to Rs 193 billion, the second was to Rs. 285 billion. Both totaling Rs. 478 billion. Let me now turn to annual withdrawals form the pool that are also two-fold, namely, 1.
Total annual payments to the members of the EPF when they are retired; and 2. Tax payments to government that ow stands at 14 per cent. Hence, the total withdrawals are Rs 211 billion (Rs. 163 plus Rs 48 billion). It is interesting to note that the EPF tax payments are calculated as Dr W. A. Wijewardana has shown in his excellent article on the subject on gross income not and not on net income (Gross Income – Interest Payments). Balancing total injections with total withdrawals, it is not difficult to calculate the annual net receipts to the resource pool that amounted to Rs 267 billion (say in 2002) that we call the total annual net returns of the pool. What does it mean? EPF account holders’ social security savings increased on average by 7.71% approximately. That amount may vary with the rate and the amount of earnings, tax rate assuming membership of the EPF remain unchanged. (See Figure 2)
Now comes the so-called debt restructuring. The objective of the debt restructuring is to reduce the total government financial needs (hereafter GFN) from the current 34.5 percent of the GDP to annual average of 13 percent of GDP between 2027- 2032. The Governor of the Central Bank says the government has already adopted stringent measures that are economically and socially costly in order to reduce it. These measures include revenue enhancing measures, and expenditure rationalisewasation. Moreover, many more taxes would come in near future. What are the perimeter and parameters of domestic debt restructuring? What has Ranil- Rajapakss government proposed?
The Impact of DDR on Superannuation Funds
To make the argument as simple and less complicated as possible, as indicated above, some assumptions are made. For example, it has been assumed that the ratios between the total value of the EPF and its constituent elements remain unchanged. The proposals say that the superannuation funds will not face a haircut. However, they include exchanging its funds to long-term bonds, interest reduction after 2025 to 9 percent, and increase of tax rate from 14 percent to 30 percent to some superannuation funds. According the CBSL calculation, reduction of GFN by 0.05 percent of the GDP is projected. In simple language, as Figure 2 shows, this means that Rs. 113 billion would be involuntarily taken away from the EPF to DDR. As a result, the total withdrawals from the fund increases from Rs. 211 billion to Rs. 324 billion. Having assumed that other factors remain unchanged, the net annual receipts to the resource pool would be in the vicinity of Rs. 154 billion. A significant reduction from Rs. 267 billion prior to the DDR. Hence, the net annual rate of return would be lowered to 4.45 percent.
In the absence of the DDR, the total value of the fund at the net return of 7.71% will increase to Rs 9,396.74 billion in 2035. With the domestic debt restructuring the total value of the EPF would increase only to Rs 6,124.81 billion in 2035. Rs. 3,271.93 will be robbed from the EPF in the coming years. This is approximately a 34.8 percent capital loss.
The writer is a former teacher in political economy. E-mail: sumane_l@yahoo.com
Opinion
A harsh reflection of Sri Lanka’s early-warning gap
Cyclone Ditwah:
Cyclone Ditwah, which swept across Sri Lanka at the end of November, caused massive damage to the country, the extent of which need not be mentioned here, as all are aware of it by now. Heated arguments went on among many parties with regard to how this destruction could have been mitigated and who should take responsibility. Although there may have been shortcomings in several aspects of how we responded to Ditwah, this article highlights a critical area that urgently requires attention if we are to protect ourselves from similar hazards in the future.
As is common in many situations, it has once again showcased a concerning weakness in the country’s disaster-management cycle, the gap between issuing early warnings and the expected public response. The Meteorological Department, the Irrigation Department, the National Building Research Organization, and other authorities issued continuous warnings to evacuate well in advance of imminent threats of flooding, landslides, and water hazards. However, the level of preparedness and community reaction fell short, leading to far greater personal property damage, including loss of a few hundred lives.
Sri Lanka is not unfamiliar with natural disasters. One of the most devastating disasters in our history could be considered the 2004 Tsunami event, which resulted in over 35,000 deaths and over $1 billion in property damage in the coastal belt. After the event, the concepts of disaster management were introduced to the country, which we have been adhering to since then. Again in 2016, the country faced massive river flooding, especially in western and southern regions, and until recently experienced repeated floods and landslides due to rains caused by atmospheric disturbances, though less in scale. Each of these events paved the way for relevant authorities to discuss and take appropriate measures on institutional readiness, infrastructure resilience, and public awareness. Yet, Cyclone Ditwah has demonstrated that despite improvements in forecasting and communication, well supported by technological advancements, the translation of warnings into action remains critically weak.
The success of early-warning systems depends on how quickly and effectively the public and relevant institutions respond. In the case of Ditwah, the Department of Meteorology issued warnings several days beforehand, supported by regional cyclone forecasting of neighbouring countries. Other organisations previously mentioned circulated advisories with regard to expected flood risk and possible landslide threats on television, radio, and social media, with continuous updates. All the flood warnings were more than accurate, as low-lying areas were affected by floods with anticipated heights and times. Landslide risks, too, were well-informed for many areas on a larger spatial scale, presumably due to the practical difficulties of identifying such areas on a minor scale, given that micro-topography in hill country is susceptible to localised failures. Hence, the technical side of the early-warning system worked as it should have. However, it is pathetic that the response from the public did not align with the risk communicated in most areas.
In many affected areas, people may have underestimated the severity of the hazard based on their past experiences. In a country where weather hazards are common, some may have treated the warnings as routine messages they hear day by day. As all the warnings do not end up in severe outcomes, some may have disregarded them as futile. In the meantime, there can be yet another segment of the population that did not have adequate knowledge and guidance on what specific actions to take after receiving a warning. This could especially happen if the responsible authorities lack necessary preparedness plans. Whatever the case may be, lapses in response to early warnings magnified the cyclone’s impact.
Enforcing preventive actions by authorities has certain limitations. In some areas, even the police struggled to move people from vulnerable areas owing to community resistance. This could be partly due to a lack of temporary accommodation prepared in advance. In some cases, communities were reluctant to relocate due to concerns over safety, privacy, and the status quo. However, it should be noted that people living in low-lying areas of the Kelani River and Attanagalu Oya had ample time to evacuate with their valuable belongings.
Hazard warnings are technical outputs of various models. For them to be effective, the public must understand them, trust them, and take appropriate action as instructed. This requires continuous community engagement, education, and preparedness training. Sri Lanka must therefore take more actions on community-level disaster preparedness programs. A culture of preparedness is the need of the day, and schools, religious institutions, and community-based organisations can play an important role in making it a reality. Risk communication must be further simplified so that people can easily understand what they should do at different alert levels.
Cyclone Ditwah has left, giving us a strong message. Even an accurate weather forecast and associated hazard warnings cannot save lives or property unless the public responds appropriately. As it is beyond doubt that climate change intensifies the frequency and severity of extreme weather events, people in Sri Lanka have to consider preparedness as a routine part of life and respond to warnings promptly to mitigate damage from future disasters.
(The writer is a chartered Civil Engineer)
by Eng. Thushara Dissanayake
Opinion
Feeling sad and blue?
Here is what you can do!
Comedy and the ability to have a good laugh are what keep us sane. The good news to announce is that there are many British and American comedy shows posted up and available on the internet.
They will bring a few hours of welcome relief from our present doldrums.
Firstly, and in a class of its own, are the many Benny Hill shows. Benny is a British comedian who comes from a circus family, and was brought up in an atmosphere of circus clowning. Each show is carefully polished and rehearsed to get the comedy across and understood successfully. These clips have the most beautiful stage props and settings with suitable, amusing costumes. This is really good comedy for the mature, older viewer.
Benny Hill has produced shows that are “Master-Class” in quality adult entertainment. All his shows are good.
Then comes the “Not the Nine o’clock news” with Rowan Atkinson and his comedy team producing good entertainment suitable for all.
And then comes the “Two Ronnies” – Ronnie Barker and Ronnie Corbett, with their dry sense of humour and wit. Search and you will find other uplifting shows such as Dave Allen, with his monologues and humour.
All these shows have been broadcast in Britain over the last 50 years and are well worth viewing on the Internet.
Similarly, in The USA of America. There are some really great entertainment shows. And never forget Fats Waller in the film “Stormy Weather,” where he was the pianist in the unforgettable, epic, comedy song “Ain’t Misbehavin”. And then there is “Bewitched” with young and glamorous Samantha Stevens and her mother, Endora who can perform magic. It is amazing entertainment! This show, although from the 1970s was a milestone in US light entertainment, along with many more.
And do not overlook Charlie Chaplin and Laurel and Hardy, and all the Disney films. Donald Duck gives us a great wealth of simple comedy.
The US offers you a mountain of comedy and good humour on Youtube. All these shows await you, just by accessing the Internet! The internet channel, ‘You tube’ itself, comes from America! The Americans reach out to you with good, happy things right into your own living room!
Those few people with the ability to understand English have the key to a great- great storehouse of uplifting humour and entertainment. They are rich indeed!
Priyantha Hettige
Opinion
There is much to learn
After the recent disaster, a great deal of information has been circulating on WhatsApp and YouTube regarding our reservoirs, highways, etc.
In many of these discussions, people have analysed what went wrong and how the damage could have been prevented. My question is this: why do all these knowledgeable voices emerge only after disaster strikes? One simple reason may be that our self-proclaimed, all-knowing governing messiahs refuse to listen to anyone outside their circles. It is never too late to learn, but has any government decision-maker read or listened to these suggestions?
When the whole world is offering help to overcome this tragedy, has the government even considered seeking modern forecasting equipment and the essential resources currently not available to our armed forces, police, and disaster-management centres?
B Perera
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